P1-1 Preparing an Income Statement, Statement of
Stockholders Equity, and Balance Sheet LO1-1
P1-1 Highlight Construction Company
Assume that you are the president of Highlight
Construction Company. At the end of the first year (December 31, 2014) of
operations, the following financial data for the company are available:
Cash $25,600
Receivables from customers (all considered collectible) 10,800
Inventory of merchandise (based on physical count and priced
at cost) 81,000
Equipment owned, at cost less used portion 42,000
Accounts payable owed to suppliers 46,140
Salary payable for 2014 (on December 31, 2014, this was owed
to an employee who was away because of an emergency; will return around January
10, 2015, at which time the payment will be made) 2,520
Total sales revenue 128,400
Expenses, including the cost of the merchandise sold
(excluding income taxes) 80,200
Income taxes expense at 30% × pretax income; all paid during
2014 ?
Common stock (December 31, 2014) 87,000
Dividends declared and paid during 2014 10,000
(Note:
The beginning balances in Common stock and Retained earnings are zero because
it is the first year of operations.)
Required:
1. Prepare a summarized income statement for the
year 2014.
2. Prepare a statement of stockholders' equity for
the year 2014
3. Prepare a balance sheet at December 31, 2014.
TUTORIAL PREVIEW.
1. Prepare a summarized income statement for the
year 2014.
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HIGHLIGHT CONSTRUCTION COMPANY
Income Statement
For the Year Ended December 31, 2014
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Revenue
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Sale
Revenue
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128,400
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Expenses
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Cost of
the merchandise sold
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80,200
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Income before Income Tax
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48,200
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